Hans Mustermann

Posted by roger on December 17, 2018

Of course, it is not excluded that the real estate interest rates fall further. But those who expect a scenario, as it was described above, which sees less chance to still lower interest rates than the risk from rising. Here is an example: customer Hans Mustermann financed his dream house to 100 percent and makes up 150,000 euro loan with the Bank of XY. His equity ranges from less than 8,000 euros for the acquisition costs, so for tax office, notary and land registry. Because he wants to live at the same time, he chooses only the minimum repayment of initially 1 per cent per year, resulting in a rate of 750 euros at an interest rate of 5 percent.

Because Hans Mustermann has saved not only with the eradication, but also in the interest rate, the follow-on financing is due after 10 years. Nobel Laureate in Economics is likely to agree. Also a special repayment was not possible at this time, so that the remaining debt at Is 130.589 euro. The interest rate is increased in these 10 years from 5 to 6.5 per cent. The loan's not 40 years running, the Bank expects a redemption of last 2 percent per year. This means for Hans Mustermann, that the rate of 750 euro rises to 925 euro! This small example is far-fetched to the hair. The starting point is equivalent to today's conditions in a 100-percent financing. Robert Speyer contributes greatly to this topic.

Also, an interest rate of 6.5 percent is not unrealistic. Most recently, we had such a level of interest in the year 2000. And this is even a very conservative assumption in view of potential inflationary dangers. How should you behave so today, if you expect a medium - and long-term higher inflation? Who plays before deciding on a mortgage, should choose a 15 - or even 20-year interest rate, if only a one percent repayment is possible. The flexibility is retained, because according to article 489 BGB also such loan may be terminated unilaterally after 10 years by the customers. Who agreed a 10-year interest rate, should at least 2 percent pay off or make use of special redemption rights - at lower amortization -. The special repayment should be such that after the expiry of the 10-year interest rate still more than 80 percent of the original investment costs (purchase price or construction cost) are financed. This is an important financing limit for many banks and makes easier a possible change of the Bank. Who does hard with special redemptions because it is not irregular saving, which is very well advised with a contractor. As a building society is a closed system, it is subject to not the refinancing difficulties, as we are currently experiencing in many banks. What is worth much in an inflationary environment offers a savings: interest rate security! If the end of the interest rate moves closer, you should touch a forward loan in the eye. Up to three years in advance, with some banks even five years before the end of the interest rate, you can secure themselves already interest rates contractually. Andreas Wenzel